When ‘Pay Later’ means ‘Pay Now’: How deferred payment options shape choice

Buy Now, Pay Later (BNPL) schemes have rapidly transformed retail payment environments, yet little is known about how their design influences consumer decision-making at the point of choice. This research investigates how BNPL availability, pricing, and framing affect purchase likelihood, abandonment, and consumers’ relative evaluation of immediate versus deferred payment options, compared to traditional Buy Now, Pay Now (BNPN) settings. Across seven experiments (including two reported in the Appendix), we demonstrate that the mere availability of BNPL reduces purchase abandonment and shifts choice away from BNPN, particularly when BNPL carries no surcharge. Conceptually, we advance prior literature by conceptualizing BNPL as a dual pricing mechanism, wherein the same product is simultaneously presented at two price points—an immediate BNPN price and a deferred BNPL price, thereby inducing comparative evaluation between payment methods rather than between purchase and non-purchase. We further introduce the notion of a BNPL surcharge and show that payment-linked price differentiation critically shapes consumer choice. While low or zero surcharges increase BNPL adoption, high-surcharge BNPL options can function as decoys, redirecting preference toward the embedded BNPN option and, in some cases, increasing overall purchase likelihood more effectively than price reductions. Taken together, these findings highlight how BNPL design operates as a powerful choice-architectural lever, extending theories of dual pricing, comparative mindsets, and decoy effects to the domain of deferred payment systems.